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NEWS STORY
TAX RISES WORSE THAN PUBLIC SPENDING CUTS - PRE BUDGET REPORT REACTION
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| December 9, 2009 |
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Big tax rises will harm customers and damage recovery, warned the British Retail Consortium (BRC). Reacting to the Pre-Budget Report today (Wednesday), BRC Chief Stephen Robertson said the Chancellor is right to make economic growth his priority but substantial cuts in public spending must be the main route to bringing the public finances under control.
British Retail Consortium Director General Stephen Robertson said: "It's business that'll bring us out of recession with retail leading the way. The Government should create the conditions that will allow retail to thrive. That means bringing the public finances under control and avoiding big tax rises that would damage demand, stifle recovery and undermine consumer confidence.
"Sustained economic growth has to be the main objective now. But, for the longer term, we need to get back to living within our means. Targeted, substantial and genuine pruning of public spending must take priority over tax rises."
National Insurance
On the one per cent increase in employer and employee National Insurance now planned for April 2011; British Retail Consortium Director General Stephen Robertson said: "This is madness. The new threshold will help some but the Chancellor should have said he's scrapping the increase already announced not adding to it. This makes it more expensive for all businesses to maintain and create jobs but is particularly bad for retail because it is such a big employer. Retailers employ three million people, 11 per cent of the workforce, and offer many young people their first opportunity to work."
VAT
On VAT returning to 17.5 per cent on 1 January 2010; British Retail Consortium Director General Stephen Robertson said: "It's a relief that VAT won't increase beyond 17.5 per cent. Consumer confidence is weakening. Big price increases would fuel inflation, make people less likely to spend and hold back recovery.
"Repricing tens of thousands of items is a mammoth task for retailers, at the busiest and most important time of year for most of them. With just three weeks to go, we're pleased the Government has responded to our calls to give retailers longer to get the job done.
"The Government must ensure a ‘light touch' to enforcement after the increase so retailers aren't unfairly penalised while this work is being carried out."
Business Rates
On the Chancellor's failure to hold back the rising tide of property costs affecting retailers; British Retail Consortium Director General Stephen Robertson said: "Retailers inevitably use a lot of property and already pay a quarter of all the £24 billion a year raised in business rates – more than any other sector. The Chancellor has offered no new help with the big bills coming from last April's deferred increases, next April's revaluation and Business Rates Supplements.
"He should be supporting retailers and the livelihoods that depend on them by holding back increases, particularly for the worst affected."
Empty Property Rates Relief
On plans to extend the exemption of empty, smaller commercial properties from business rates; British Retail Consortium Director General Stephen Robertson said:"Rising numbers of empty properties show this tax has failed in its objectives but the Chancellor's exemption goes nowhere near far enough. Relief should be restored to empty business premises of all sizes.
"The Government is ignoring the real reasons shops are vacant. No-one gains by keeping property empty. It's unoccupied because there isn't the demand for it at that time and place. Demanding extra tax will not conjure up new tenants. "
Trade Credit Insurance
On confirmation that the Government's trade credit insurance top-up scheme will end at the end of this year; British Retail Consortium Director General Stephen Robertson said: "It's too soon to remove this help. In our latest survey, 85 per cent of the UK's large retailers and 68 per cent of SMEs said the availability of trade credit insurance hadn't improved. We're still in recession and insolvency experts are warning more retailers will go to the wall.
"The Chancellor is jeopardising retail recovery and jobs by failing to continue the scheme into 2010."
Scrappage
On the Chancellor's plan to subsidise the cost of replacement central heating boilers; British Retail Consortium Director General Stephen Robertson said: "This is welcome recognition that price incentives are a major way of driving changes in behaviour but this goes nowhere near far enough. We've been telling the Government it should be including all domestic appliances in a time-limited scrappage scheme and permanently removing VAT from energy efficient replacements. That would make a much bigger contribution to the Copenhagen climate change agenda."
Media Contacts: BRC Press Office 020 7854 8924 Out of hours 07921 605544
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